11th Jan 2006 07:00
Body Shop International PLC11 January 2006 THE BODY SHOP INTERNATIONAL PLC Christmas Trading Update 11 January 2006 Key Messages: • Positive comparable store sales for the second consecutive Christmas period in three regions and positive total retail sales growth in all four regions. • Christmas total retail sales +6%; comparable store sales +3% (10 weeks to 31 December 2005). • Year to date total retail sales +6%; comparable store sales +4% (44 weeks to 31 December 2005). • Strong sales performance in Asia Pacific and Europe, Middle East and Africa; USA and UK not as strong as expected. • The Body Shop At Home sales +17% in the 10-week period and +15% year to date. • Full year operating profit now expected to be level with, or marginally ahead of, last year (2005: £39.2 million) due to lower than forecast retail sales and non-recurring costs in excess of £4 million. • Earnings per share expected to be marginally lower than last year after higher effective tax rate. • Year-end inventory projected to be lower than at the same time last year. Sales Performance 10 weeks to 31/12/2005 44 weeks to 31/12/2005 Total Comparable Store The Body Total Comparable Store The Body Retail Sales Shop At Retail Sales Shop At Sales Home Sales Home Americas +3% -1% +6% +4% -1% +9%Asia Pacific +13% +7% +28% +12% +6% +28%Europe, Middle East & Africa +5% +5% - +7% +6% -UK & Republic of Ireland +3% +1% +26% +3% +2% +16%Total +6% +3% +17% +6% +4% +15% The Americas region (22% of total YTD retail sales) underperformed expectationsin the Christmas trading period. The US market experienced difficult tradingconditions this Christmas, driven in part by lower traffic levels in theshopping malls, with total retail sales up 4% and comparable store sales down4%. Trading conditions were compounded by execution issues in the inventorysupply chain, which lead to some out-of-stock positions. A special task forcehas been put in place to resolve these supply chain issues. The Body Shop AtHome achieved sales of +6% in the 10-week period, giving growth of +9% year todate. This channel currently represents approximately 14% of retail sales inthe US market. E-commerce outperformed expectations, more than doubling salesin the Christmas period and now represents over 3% of retail sales in the USmarket. In Canada, total retail sales and comparable store sales were flat. The Asia Pacific region (26% of total YTD retail sales) continued to performwell, reflecting strong brand positioning and in-store execution. Ourcompany-owned markets, Hong Kong and Singapore, achieved comparable store salesgrowth of 11% in the 10-week period, assisted by improved sales of Christmasgifts. Other key markets that performed well were Japan (+10%), Korea (+11%),Malaysia (+13%) and Taiwan (+18%). In Australia, comparable store sales weredown 1% in the 10-week period, but this was balanced by strong growth of 28% inThe Body Shop At Home. Our plans to expand into India are on track. In the Europe, Middle East & Africa region (27% of total YTD retail sales),sales trends continued to be positive with comparable store sales growth of +12%in the Middle East, +10% in France and +8% in Holland. Germany recorded flatcomparable store sales in a difficult trading environment. We have successfullyopened the first five The Body Shop stores in Russia with our franchise partner. In the UK and Republic of Ireland (25% of YTD retail sales), comparable storesales grew by +1% following growth of +5% in the same period last year, despitea challenging environment and some localised decreases in customer traffic.Performance in The Body Shop At Home was encouraging, with growth in thischannel improving to +26% for the 10-week period and +16% for the year to date. Outlook Whilst many markets achieved the forecasted level of sales growth during theChristmas period, overall retail sales were lower than expected as the US and UKmarkets did not achieve the targeted rate of growth in this period of highprofit leverage. Gross margins are above the level achieved last year. However, the full yearoperating profit will reflect over £4 million of non-recurring items comprisingreorganisation and other costs that have been incurred to improve performanceand reduce future operating costs. As a result of the somewhat lower than expected Christmas sales andnon-recurring costs, we have revised our previous expectations for the full yearoutcome. We now expect operating profit to be level with, or marginally aheadof, last year. Our effective tax rate in the last financial year was 19%. Previously, we wereforecasting an effective rate of 24% for the current year. However, due tochanges in geographical profit mix, we now anticipate a tax rate slightly lowerthan our previous estimate with earnings per share marginally down on last year. Inventory is expected to be lower at the year end than at the same time lastyear. Peter Saunders, Chief Executive Officer, said: "Our Christmas sales results metour expectations in many markets. However the underperformance in the USA andUK, together with the impact of the £4 million in non-recurring costs,underplays our potential. Action plans are now in place to rectify the supplychain issues in America. We are excited about the new product introductionsplanned for this coming year. The continuing growth in Asia Pacific and Europe,Middle East and Africa demonstrates the wide reaching, global strength of TheBody Shop brand. We remain confident that the strategy we have in place willdeliver a higher level of growth over the medium term." Preliminary results for the 52 weeks to 25 February 2006 will be announced on 27April 2006. For media enquiries, please contact: The Body Shop International PLCBill Eyres, Head of Global Corporate PR, Tel: 01903 844040 Brunswick GroupWilliam Cullum, Tel: 020 7404 5959 For investor enquiries, please contact:Angela Bawtree, Tel: 01903 846333 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Bos Glb Hldgs